From Barcelona to League 1 - the sad story of Leeds United’s financial collapse

Alan Smith Leeds
As Leeds kick off the new season with hopes of returning to the Premier League, we remember their painful demise from 15 years ago

From Peter Ridsdale’s exotic fish to the rumours about Seth Johnson’s contract negotiations, there have been many enduring symbols of Leeds United’s financial implosion in the early 2000s. These reports of largesse and living the dream - borrowing against a gilded future that never quite materialised - have become a cautionary tale of the Premier League era.

A team of young, talented players was torn asunder as the club went from the Champions League semi-final to the Championship in the space of three traumatic seasons. Fifteen years on from Premier League relegation - and four owners and 15 managers further down the line - Leeds are yet to return. They even spent three seasons mired in the third tier as part of their continued exile.

Inspired by the club’s ambition, Michael Duberry signed for Leeds from Chelsea for £4.5 million in 1999. He would experience their spectacular rise and fall first hand. “The atmosphere and the environment was the best of my football career,” he says. “I still speak to some of the squad now and they’d agree. Everyone wanted to do well and had each other’s backs. There was no bitterness. There were no cliques. Everyone just had the same vision and wanted the same thing.”

While Duberry insists that the squad never lost that sense of togetherness throughout his time at Elland Road, it was certainly put under strain. Having staked everything on qualifying for the Champions League, Leeds fell short in the 2001-02 season, with disastrous consequences. They finished fifth, five points shy of Newcastle United and the guaranteed income needed to prevent their debts from spiralling out of control. The whole complexion of the club changed almost overnight.

That failure sparked off a series of events culminating in two relegations, administration and damaging points deductions over the coming years. Leeds’ best players were sold in cut-price deals to stave off immediate ruin and many were still being paid long after they’d left. The concept of ‘doing a Leeds’ entered football parlance as a result – a shorthand phrase for the suffering caused by chaotic mismanagement and living beyond your means.

Everything disintegrated so quickly, and after the outlook had appeared so positive. In January 2002, winning the title seemed a distinct possibility. Top of the table following a 3-0 win over West Ham United on New Year’s Day, Leeds’ season was sent into a tailspin by defeat to third-tier Cardiff City in the FA Cup less than a week later. They wouldn’t win another game until March as the top four retreated from view and the board were forced to rethink their strategy.

Peter Ridsdale and his fellow board members had long known the risks attached to how the club was operating but felt that players could be sold at any moment to rebalance the books. The introduction of the transfer window changed that, and extracting the best price from buyers proved much harder than expected. In the summer of 2002, Leeds went into a downward spiral that was impossible to arrest.

“We’d just had a great campaign in the Champions League and fans were now seeing players being sold. Players started going and you could see that things weren’t the same,” says Duberry. “Any business that loses huge assets is going to go down the pecking order, and that’s what happened. As much as we still had some good players in the squad, you’re going to end up in decline.”

David O’Leary, the manager who’d put together one of the most exciting and vibrant teams in the country, was sacked for missing out on Champions League qualification and releasing a controversial book – Leeds United on Trial – that exposed the inner workings of the club during Lee Bowyer and Jonathan Woodgate’s trials for assault. Rio Ferdinand and Robbie Keane left that summer, with Bowyer, Woodgate and Robbie Fowler following them a few months later.

Rival clubs exploited Leeds’ desperation to sell and a squad shorn of some of its outstanding members staggered towards safety under Terry Venables and then Peter Reid. A 3-2 win at Highbury secured their Premier League status on the penultimate day of the 2002-03 season, highlighting the ability and resolve of the remaining players.

Michael Duberry, Leeds United relegation, Playing Surface

But they were cherry-picked again that summer, with Harry Kewell, Olivier Dacourt and Nigel Martyn leaving. A threadbare team, relying on youngsters from the academy like Paul Robinson, James Milner and Aaron Lennon, as well as a raft of loan players of variable quality, simply couldn’t compete.

Relegation seemed likely from the start. Despite the players’ best efforts there were tears on the pitch, and in the stands, as a 3-3 draw with Charlton Athletic at Elland Road in May 2004 confirmed their fate. It was a seismic moment – one of the biggest and most historically successful clubs in the country, potential title winners just seasons before, unceremoniously dumped out of the Premier League.

“I’ve always got this image in my head of me sitting on the floor with no shirt on after the home game against Charlton, when we’d gone down. As a sportsman you’re competitive. You tell yourself you’re good. You tell yourself you’re the best. But in that moment, you know you’re not good enough. You’re one of the three worst teams,” says Duberry.

“That realisation that you’re not good enough – you’re not even a Premier League player any more – really hits home. The fans ran on the pitch but from a personal point of view no sportsman wants to deal with failure. It’s a deep loss. Leeds is a big club and you’re part of one of its darkest times. It’s not nice to have that association.”

Three years previously, Duberry and his team-mates had been part of an eventful journey to the last four of the Champions League. High-profile matches against AC Milan, Real Madrid and Barcelona had reflected the club’s enhanced status, but those unforgettable highs quickly gave way to some crushing lows and a precipitous decline.

Leeds’ direction of travel was evident from their transfer dealings in the summer of 2003. Jody Morris was the only permanent arrival, on a free transfer from Chelsea, while gaps in the squad were plugged by speculative loan signings from French football, like Zoumana Camara, Lamine Sakho, Salomon Olembe and Cyril Chapuis.

“Slowly but surely the squad was being stripped out. From that period up until now, Leeds United were just in the papers for anything other than football. It was a pure distraction. You’d be doing the press on a Friday and you weren’t even being asked football questions. Even if you were focused as a player it was just always brought up so you had to address it. With some of the fans not liking what they’re reading it made for an intense atmosphere,” says Duberry.

The 2003-04 season had opened with a 2-2 draw at home to Newcastle United. After a demoralising summer, Leeds had been within a few minutes of a morale-boosting win until Alan Shearer snatched a point for the visitors. Their side, featuring Jonathan Woodgate and Lee Bowyer, was a reminder of what might have been. Both had been sold for well below market value six months earlier in order to fend off financial catastrophe.

A first win was secured at the fourth attempt, but Leeds then embarked on an awful run of form, losing eight of their next nine games. After a 6-1 thrashing by Portsmouth at Fratton Park in early November – the club’s heaviest ever Premier League defeat – Peter Reid was sacked. Already rooted to the bottom of the table, and having conceded 13 goals in their last three games, change was desperately needed.

Eddie Gray returned to take over on a temporary basis. One of the best and most popular players in Leeds’s history, having been a key component of Don Revie’s all-conquering side, he had managed the club for three years during the 1980s. A youth team coach responsible for bringing through Ian Harte, Harry Kewell and Alan Smith amongst others, he had also served as David O’Leary’s assistant before being let go by Reid.

Eddie Gray, Leeds United relegation, Playing Surface

“To tell you the truth I wouldn’t have done it for many people but it was Leeds United and the chief executive at the time – Trevor Birch – was someone I’ve got a lot of respect for,” recalls Gray. “He asked me to go back. If it wasn’t for Trevor I wouldn’t have done it because I knew the situation the club was in from a financial point of view. There was a new regime coming in and it was difficult. It didn’t take long to realise that it would need someone much better than me to turn it around.”

Gray’s association with Leeds was a long and largely successful one, but he’d been out of frontline management for well over a decade. The decision to appoint him was driven by the belief that his understanding of the club and players would have a revitalising effect. It worked, at least in the short term, as Leeds enjoyed an upturn in results. After a 2-0 loss to Bolton Wanderers, they then went five games unbeaten to regain touch with those outside the bottom three.

The last game in that run was a goalless draw with Aston Villa on Boxing Day, as O’Leary returned to Elland Road for the first time since his sacking. It was an emotionally-charged reunion with a mixed reception for the former Leeds manager. Some booed, others cheered. There was an appreciation of the fact that O’Leary had allowed supporters to dream once more, but it was hard to see past the deep, and potentially terminal, cost at which that hope came.

It briefly felt like something was stirring in those first couple of months under Gray. That this patchwork squad might still have enough spirit and quality to pull itself out of trouble. A brutal reality check put paid to that as Leeds lost six league games in a row, scoring just twice, and exited the FA Cup at the third-round stage.

The season’s one bright spot was the emergence of promising young players like James Milner and Aaron Lennon, who didn’t seem overawed by the club’s perilous situation and the challenge of fighting against the ever-rising tide. Due to a lack of alternatives, they were afforded first-team opportunities far earlier than they would otherwise have been. Not that they would stay long given the circumstances.

“The biggest challenge was that the players who were worth something knew that the club was trying to sell them every day, which didn’t go down well. It doesn’t lead to a happy camp. Players are more or less thinking they might be leaving in the morning. That was the nature of the job at the time. But that’s no excuse. You always think you can do better,” says Gray.

Off the field, the club was enveloped in uncertainty. Debts were spiralling and there was no sign of a resolution. Leeds owed around £100 million to creditors, thanks largely to some innovative, if risky, structuring of transfer deals and loan arrangements.

Intended to free up resources in the short term to create a successful, and ultimately self-financing, team, the schemes created crippling costs that built up over time and would come to engulf the club. Without Champions League football to rely on, Leeds’ revenue couldn’t keep pace with its ever-rising debt. Their fate was already sealed. Catastrophe could be delayed, but not avoided.

Leeds United

In October 2003, Trevor Birch had been appointed as the club’s Chief Executive. The man responsible for helping to bring Roman Abramovich to Chelsea, he was tasked with cutting costs and seeking outside investment to make Leeds viable again. By January, and with no end in sight, the players were asked to defer a proportion of their wages.

“I remember the meeting vividly,” says Duberry. “All the senior players, like me, Mark Viduka, Gary Kelly, Jason Wilcox and David Batty agreed that any player earning over a certain amount would pay. Not the young lads. Anyone getting paid over a certain amount would agree to defer 25% of their wages, which we thought was reasonable. The club turned around to us and said we were being unreasonable.

“It got out in the media. I remember in The Yorkshire Post there was a big campaign saying that the players were greedy. It was a misinterpretation. The club was in turmoil and then a section of the fans were turning on some of the players because they thought we were being greedy and not wanting to help.”

When everyone needed to be pulling in the same direction, a wedge was driven between players, supporters and the club hierarchy. An agreement on a wage deferral was eventually reached but the outlook remained bleak. A reprieve finally arrived in late March, with just 10 matches of the season remaining and Leeds still in last place. A consortium of local businessmen took control of the club in a £30 million deal, with Gerald Krasner becoming the new chairman.

The announcement ended months of speculation, amid swirling rumours about Elland Road and Thorp Arch being sold to make ends meet. Debts were restructured or written off, with many creditors accepting 20 pence to the pound, while Leeds United plc and a holding company were placed in administration prior to being wound up. The move safeguarded the club’s immediate future but its Premier League status hung in the balance.

The first game under new ownership, a fortuitous 2-1 win over Manchester City, breathed fresh life into the survival fight. Consecutive wins against relegation rivals Leicester City and Blackburn Rovers meant that Leeds were only in the bottom three on goal difference with six games remaining. Having dragged themselves back into contention they then stumbled with the finishing line in sight.

Leeds United’s 14-year stay in the top flight officially ended on Saturday 8 May. The previous week’s results, which left them six points from safety with two games to go, and a vastly inferior goal difference, meant that the inevitable simply had to be rubberstamped. Despite having almost 40,000 in attendance, there was a strangely muted atmosphere for the visit of Charlton. With nothing to play for, the sting had been taken out of proceedings.

A young team, featuring eight academy graduates, controlled the game and should have won, but a familiar brittleness undermined their efforts. They went 3-1 up through Alan Smith’s penalty with just over 20 minutes left, but then Jason Euell capitalised on some poor defending to score twice in quick succession, condemning Leeds to relegation.

“It felt terrible. It was the lowest point I’d ever had at the football club,” says Gray. “If you’re good enough to stay up you’ll stay up. We were six points off staying up, which is quite a lot when you actually look at it. There were a few games which we might have won and didn’t. When you’re down there things seem to go against you, or you imagine they do, but in football it’s about doing it yourself and making your own luck.”

Leeds United

Disappointed yet defiant supporters invaded the pitch at the end, principally to say goodbye to Alan Smith, the homegrown hero who had to leave. He would sully his legacy somewhat by choosing to join fierce rivals Manchester United, but on that solemn afternoon he was held aloft and paraded around the ground, a symbol of what Leeds were, had strived to become, and had lost in the process.

Smith was the poster boy of O’Leary’s reign – a young team, with strong local roots, complemented by a clutch of quality signings. A process of gradual evolution and development, it fell apart with dizzying speed. In the wake of relegation, the vultures circled and picked through the leftovers, stripping the carcass bare. James Milner, Paul Robinson, Ian Harte, Dominic Matteo and Danny Mills also moved on, yet Smith’s was the most painful departure.

The tireless striker had played more than 200 games for the club since making his debut against Liverpool in 1998 - and scoring with one of his first touches of the ball. He was far from prolific but that didn’t matter. He cared passionately for the club when few others seemed to. Smith was there when Leeds were top of the league, and when they fell to the bottom, his commitment to the cause never wavering. Supporters would question whether the same could be said of the whole squad.

A 1-0 defeat to Chelsea on the final day ended matters once and for all. Leeds finished in 19th place, spared the indignity of coming last by virtue of having scored a couple of goals more than Wolverhampton Wanderers. In contrast they had conceded 79, an average of more than two a game, which made for the division’s worst defensive record.

Considering the vast changes in personnel that took place after relegation, the side that started life outside the Premier League was almost unrecognisable from what had come before. Against the odds, Leeds threatened to make a comeback under Kevin Blackwell in the 2005-06 season, losing to Watford in the play-off final. Yet a year later they finished bottom of the Championship after a 10-point deduction for entering administration.

A further 15-point deduction prevented an immediate return and it was only at the third attempt that Leeds escaped from League One. After a long time spent treading water in mid-table, hope was restored with owner Andrea Radrizzani’s decision to buy back Elland Road after taking over in 2017.

Article continues below

The arrival of Marcelo Bielsa last summer only added to the sense that a brighter future could be just around the corner. The Argentine has excited the club’s fans in a way that no one has since they famously reached the Champions League semis back in 2001. Despite looking a good bet for promotion for much of the 2018-19 season, they eventually finished third and lost in the playoff semi-finals. But there is optimism for Bielsa’s Leeds ahead of the new Championship campaign, which kicks off on Sunday against Bristol City.

Fifteen years on from losing their Premier League relegation, the club is now on a far more stable footing and playing a breathless brand of attacking football. Supporters now have a reason to dream again. The top flight, which has eluded them for so long, feels within touching distance once more.

“Getting promoted would mean everything to the fans. The fanbase is tremendous, home and away. It would mean a lot to the city, but more importantly the club itself,” says Gray. “I hope to see them get back to playing against the best teams in the country. It would mean a lot to everyone connected with the club – past and present. It would definitely mean a lot to me after what happened in 2003/04.”